Bilfinger - Firm with the Midas Touch Claims Bribery Scandal is in the Past

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21 December 2013 | Updated 01 January 1970

Bilfinger, the engineering and services group, which earlier this week announced the acquisition of UK based Europa Support Services has just also confirmed that the Swiss pharmaceutical company, Siegfried, has extended an existing contract for the maintenance of production facilities until the end of 2020. Order volumes total  € 50million. An option to extend the contract for a further five years was also agreed.

The scope of services covers site engineering, automation, piping construction as well as procurement and spare parts management and will be undertaken by Bilfinger Industrial Services – which on its own expects end of year results to show a turnover of €4.0billion.

Bilfinger Industrial Services is the largest part of the Bilfinger Group, which has a portfolio of clients and services globally.

Today the UK

On Tuesday December 16, Bilfinger became a leading facility services provider in the UK and the Republic of Ireland with the acquisition of real-estate services provider Europa Support Services. Bilfinger has already stated its intention to take its turnover from € 35million to € 215million in fairly short order.

Europa was previously majority owned by two private equity funds with minority stakes held by the founder's family and management. Bilfinger will acquire all shares and has insisted that the parties do not disclose details of the purchase price.

Europa employed about 3,300 people – delivering a substantial share of its services with its own, qualified personnel. The management at Bilfinger believes that  long-standing customer relationships have been established. Customers include United Utilities, intu (formerly Capital Shopping Centres), Liverpool Victoria and Esso.

According to a company spokesperson: “The United Kingdom is one of the most important facility management markets in Europe. This acquisition means that Bilfinger, the market leader in Germany, is now also able to successfully position itself in the competition for large contracts with internationally active companies there. The further internationalisation of the facility services business also opens up important strategic options for Bilfinger.

“International major clients such as IBM, Deutsche Bank, Deutsche Post, BASF, Orange, Telefonica, GE and Delphi increasingly expect their service providers to be in a position to manage their real-estate portfolios across national borders from a single source.”

Of Bilfinger's international facility services business, 40 per cent of its current output (€ 1.7 billion) is already being generated outside Germany.

Bribery scandal - Deferred Prosecution costs €23.3 million

December 9 saw Bilfinger reach a Deferred Prosecution Agreement with the U.S. Department of Justice (DOJ) in relation to the bribery of public officials in Nigeria which dates back to 2003. The subject of the investigation was a series of events in connection with a pipeline project carried out by the former subsidiary Gas and Oil Services Nigeria in a joint venture with an American company. Gas and Oil Services has since been wound up.

Under the Agreement, the DOJ will initiate criminal proceedings and Bilfinger will admit to violations of the American Foreign Corrupt Practices Act (FCPA). The proceedings will be suspended and dismissed at the end of the three-year term of the Agreement on condition that Bilfinger continues the process of optimising its compliance system, with the participation of an independent compliance monitor who is to be appointed for a period of 18 months. Bilfinger will also pay a fine of €23.3 million. The company states that it has made sufficient provisions to cover this amount.

“We are pleased that we have now been able to put these events from the past behind us,” said Roland Koch, Chief Executive Officer of Bilfinger SE.

Poland

Just as the UK announced that it will remove subsidies for on-shore wind turbines and increase subsidies for off-shore farms (the UK has the most off-shore sites – the vast majority owned and operated by non-UK companies particularly those from France and Scandinavia), Bilfinger, along with Polish steel construction company Crist and the state-owned investment fund MARS, will together produce steel foundations for offshore wind turbines in Szczecin, Poland. Funding for the project will also come from the European Union. There is no indication that these structures (being produced in a landlocked country) are destined for UK territorial waters despite Bilfinger openly declaring that it expects to see strong growth in this sector primarily in the United Kingdom - and Scandinavia!

Poland's Finance Minister Wlodzimierz Karpinski and Bilfinger’s Joachim Enenkel signaled the start of construction for the new production facility a fortnight ago.

Bilfinger has already been involved in the installation of more than 500 offshore foundations in the North and Baltic Seas. "We are now not only in a position to install steel foundations on the open seas but can now also produce them ourselves in advance", emphasised Joachim Enenkel.

Norway – December 4

Bilfinger has extended a framework agreement with its major client Statoil by an additional two years. The company will provide maintenance services for oil and gas platforms in the North Sea and for onshore facilities on the country’s coast. The order includes insulation, scaffolding and surface treatment and has a total volume of €250million over a contract period of two years.

The international oil and gas sector is one of Bilfinger's key growth markets. The Group’s annual output volume in this sector is more than €1.5 billion.

Article written by Brian Shillibeer | Published 21 December 2013

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